Bloomberg Law
Free Newsletter Sign Up
Login
BROWSE
Bloomberg Law
Welcome
Login
Advanced Search Go
Free Newsletter Sign Up

Uber, Others See Lobbying Chance in DOL Lull on Gig-Worker Rule

April 26, 2022, 5:55 PM

The Biden Labor Department has yet to clarify what approach it will take to determine whether workers qualify as independent contractors or should be employees due full benefits, and business groups see that lull as an opportunity to influence what comes next.

Powerful gig companies like Uber Technologies Inc. and Lyft Inc. are lobbying Washington to provide a more flexible classification standard that will allow them to continue operating their models as is, creating friction with the Biden administration’s agenda and demands of unions closely aligned with the president. Labor groups and some Democrats say these workers should be classified as employees who are owed benefits like minimum wage, overtime, and unemployment insurance under the law.

Many expected the administration to take a stricter approach to independent contractor relationships, but it’s unclear how the administration will proceed after David Weil, a longtime critic of companies’ use of independent contractors, couldn’t win enough votes in the Senate to be confirmed to lead the DOL wage division.

The Biden Wage and Hour Division scrapped a Trump administration rule setting out a business-friendly independent contractor standard. The Coalition for Workforce Innovation and other business groups subsequently sued, and a Texas court reinstated the Trump rule in March. The administration hasn’t appealed the ruling or issued new guidance, but maintains that fighting misclassification “is and will remain a priority.”

“The Department has successfully settled and litigated numerous impactful cases over the last year and has many more in various stages of investigation and litigation. The focus on this work will continue,” Solicitor of Labor Seema Nanda said in a statement.

With this opening, CWI—whose membership includes Lyft Inc., Postmates Inc., and several other gig companies—said it’s actively working on a long-term legislative proposal to address independent contractor status that it hopes to release before the end of this Congress. The plan will include not only rideshare and delivery drivers, but other industries that rely on independent contractors.

“We certainly think there is a good path forward and we’re working on it actively, in hopes of having a proposal out there before the end of this Congress,” said Evan Armstrong, chair of CWI and vice president of government affairs for the Retail Industry Leaders Association.

DoorDash, Grubhub, Uber, Lyft, and other app-based companies also launched a new lobbying group in March, called the Flex association aimed at “educating” policymakers on issues affecting the on-demand economy.

Lobbying Ramps Up

Following various state-level policy fights over gig workers’ status, business groups seem open to providing some benefits to workers without giving them the title of “employee.”

Armstrong said that CWI wants to work in a bipartisan way to hammer out a “modern approach” to independent work that “solidifies and maximize the positives and the flexibility and the entrepreneurial ship that can be created as well.” The conversations about the proposal are ongoing.

Meanwhile, the Flex association announced an ad-buy last month in the D.C.-metro area titled “Independence Works” featuring stories of app-deployed workers touting the flexibility in choosing their working hours.

Kristin Sharp, CEO of the group, in a statement said the association wants to work with a large group of stakeholders in order to find a worker classification model that preserves the “flexibility workers want” while also considering benefits and protections.

And with former Boston Mayor Marty Walsh now heading the Labor Department, players on both sides of the classification fight say they’ve enjoyed frequent contact with the administration on the issue.

Uber appreciates “the collaborative working relationship” it has with Walsh and his team at the Labor Department, CR Wooters, head of federal affairs for Uber, said in a statement. “We look forward to continuing to elevate the voices of workers on our platform in conversations with them and others.”

The International Brotherhood of Teamsters, which has backed some groups organizing rideshare drivers, is “absolutely” being heard and engaged by the Biden DOL on the classification question, said Sunshine McBride, deputy director for federal legislative affairs.

Contested Solutions

One possible model floated by gig-companies is a new law in Washington state negotiated between rideshare companies, drivers, and the Teamsters-affiliated Drivers Union that provides guaranteed minimum per-trip pay rates, paid sick leave, and workers’ compensation without classifying drivers as “employees.”

“The Washington law marks a bold new step in how this can be done together, in collaboration with labor and legislators, to best protect drivers,” a Lyft spokesperson said in a statement. “We hope that federal policymakers take lessons from what took place in Washington state.”

Labor unions, though, have said they don’t want other states to enact similar laws.

“We don’t believe Washington state is a model” for other states to follow when regulating gig work, Liz Shuler, president of the AFL-CIO, the largest organization of unions in the U.S., said during an April 20 press conference.

“App-based drivers are misclassified workers. Period,” Sean M. O’Brien, general president of the Teamsters, said in a statement. “Gig companies are pushing an agenda designed to rob workers. We need to take strong action at federal and local levels to put a stop to intentional misclassification of employees.”

Gig giants also have pointed to their success in California, where they funded a $200 million ballot initiative to similarly prevent their drivers from becoming “employees” under the law while still receiving some benefits.

Rideshare companies argue that their drivers aren’t seeking out work on their platform to get the full benefits provided by employment, like insurance, and that many only drive for a couple of hours a week.

According to Lyft, 95% of its drivers work fewer than 20 hours per week. And Uber points to a survey of app-based workers from Benenson Strategy Group showing that 86% received health insurance from another source.

But advocates for drivers note that the law isn’t applied based on the number of hours worked; coverage applies based on “employee” status, and gig-company arguments are being used to mislead workers about their rights.

“People think part-time work is not covered by employee rights,” said Nicole Moore of Rideshare Drivers United, an independent association of rideshare drivers. “Well, it is actually.”

To contact the reporter on this story: Rebecca Rainey in Washington at rrainey@bloombergindustry.com

To contact the editor responsible for this story: Genevieve Douglas at gdouglas@bloomberglaw.com